Accountants want loans as deadline looms

As the 31 January deadline looms, requests from accountancy firms for funding to meet payments has leaped 58%.

Independent finance provider Syscap says it has around 150 outstanding requests from accountancy firms seeking to fund their tax payments, a 58% leap from the same time last year.

The amount being requested by firms is also significantly higher, with the average loan needed standing at £450,000 compared to last year’s average of £200,000.

Chief executive officer of Syscap Philip White, said: ‘Feedback we have received from business across the board suggests that over the last six months HM Revenue & Customs has been gradually making it harder for them to access its “time to pay” scheme.’

HMRC has however announced it would allow one individual from an accountancy partnership to apply the ‘time to pay’ scheme on its behalf, but Syscap says it has increased its paperwork burden in other ways including asking applicants to provide things such as cashflow forecasts and a forecast of its profit and loss account, balance sheet and a letter from their bank.

There are concerns HMRC might not have the capacity to properly deal with requests from accountancy firms among the general surge of applications.

‘Normally an accountancy firm might just go to their bank but many firms outside the Big Four are finding that the bank they have been with for years is no longer interested in lending at a sensible rate or that they want to tack on huge arrangement fees even for small loans,’ White added.

A spokeswoman for HMRC said it 'has always taken a sympathetic approach to businesses that have genuine short term difficulties in paying the tax they owe. In such cases, through the BPSS they can ask for a revised timetable (a time to pay arrangement) to pay what they owe. This can avoid HMRC taking action that would lead to an otherwise viable business or individual being declared insolvent by the courts.

'HMRC only initiates winding up or bankruptcy action where it believes this is the best course of action to protect the interests of the Exchequer in respect of a particular debt.

'Although there is no limit on the number of time to pay arrangements a business can have we do ask additional questions when businesses make a repeat request. This helps to ensure that the business is still viable and taking all possible steps to pay off its other debts. It is only right that each request is considered on its merits - that has always been the case,' she added.

HMRC said it is committed to providing a high quality and professional service to its customers. 'By its very nature the BPSS workload varies throughout the year so, during peak periods, we will deploy staff accordingly to cover and reduce any delays,' the spokeswoman said.